Latest index figures show that asking prices in the UK now average at £307,033, an increase by 1.3% or £3,843 in April compared to the previous month and a rise of 7.3% year on year.
This new record high in asking prices has been reached due to high market activity by buy-to-let investors trying to cash in before the stamp duty increase in April, the Rightmove index report explains.
In fact, the stamp duty rise acted as a catalyst to the bottom of the market and led to the knock-off effect of energising the higher sectors of the market as the driver for growth was second-stepper and top of the ladder sectors.
The report also points out that smaller properties in the first-time buyer as well as buy-to-let sector saw, indeed, a price drop of 1.4% month-on-month.
“The further demand boost from those looking to complete before 01 April has now dissipated, resulting in a 1.4% drop this month in the average price of a property coming to market in the first time buyer and investor sector,” said Miles Shipside, Rightmove director and housing market analyst.
“However, the momentum it created looks to have enabled owner occupiers of these properties to trade up. This has built an onward chain reaction of higher demand in higher price brackets as more people can move,” he explained.
Furthermore, he pointed out that pressure regarding upwards pricing moved into the typical second stepper sector of three or four bedrooms, not counting four bedroom detached properties. Prices increased by 0.6%, equalling £1,512 this month. The sector has seen the largest year-on-year rise of 8.6% or £20,519.
At the same time, the top of the ladder sector, meaning four bedroom detached or five bedroom or more, has seen the biggest rise in April, up by 1.9% or £9,970. Viewed on an annual level, though, their increase remains the lowest.
“While some felt that there would be a stampede of existing landlords selling to other landlords, these figures indicate that many of those who sold during the buy to let rush were actually first time sellers looking to trade up,” said Shipside.
“They used the heightened demand from investors competing fiercely with first time buyers to springboard themselves onto the next rung of the housing ladder. After several years of being held back from moving by post credit crunch price doldrums, they have now benefited from a heady combination of price growth, historically cheap interest rates, and confidence of a quick sale with purchasers working to a tight deadline,” he pointed out.
“Trader uppers have now been unleashed and this has spread demand upwards and helped to form longer chains. Interestingly there has been a stamp duty double whammy effect pushing up prices in these higher sectors too. Earlier reforms in December 2014 reduced stamp duty for all properties priced below £937,000, especially around the previous punitive thresholds, also boosting demand and prices,” he added.
Whilst demand from some buy-to-let landlords dropped off slightly, Rightmove recorded its most ever visits to the website in March. “It is likely that appetite from investors will return for the right property at the right price and yield, but in the meantime it gives first time buyers an opportunity to fill the void with less competition from typically faster moving cash rich landlords,” Shipside explained.
Source: Property Wire